(Bloomberg) -- High-yield municipal bonds issued to finance housing for police officers, teachers and nurses in California are showing signs of strain. Most ...
-- High-yield municipal bonds issued to finance housing for police officers, teachers and nurses in California are showing signs of strain. Mira Vista Hills Apartments, a 280-unit rental complex in the Bay Area city of Antioch, disclosed in a Friday filing that it didn’t meet a debt-service coverage ratio required by investors. At least four other complexes, known as “ workforce housing ,” have drawn on reserves since the start of 2023 to help pay their debt, according to securities filings.
“It’s a highly levered property that’s paying out a lot of fees, so it needs to generate enough revenue to cover all of that,” Washburn said. The market for city and state debt has financed other efforts to provide affordable housing. Colleges, including the University of Vermont, and ski towns in Colorado such as Telluride have issued bonds to help house staff.
Unlike traditional municipal bonds that pay off debt over time, workforce-housing deals don’t promise principal repayment on a set schedule, MMA’s Washburn said. Excess income generated by the projects can be used to pay down principal, but bondholders are relying on the sale of the complexes at an appreciated value for repayment, she said.
California Affordable Housing Mira Vista Occupancy Rates Workforce Housing Lisa Washburn National Association Of Realtors Middle-Income Households Municipal Bonds
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